National Association of Home Builders Discusses Economics and Housing Policy

Townhouse Market Share Weakening with Drop in First-Time Buyers

Total townhouse construction declined on a year-over-year basis during the first quarter of 2014.

According to NAHB analysis of Census data of Starts and Completions by Purpose and Design, single-family attached starts totaled 13,000 for the quarter, compared to 15,000 during the first quarter of 2013. Over the last four quarters, townhouse construction starts totaled 66,000, down from the 72,000 total for the four quarters prior to this period.

Using a one-year moving average, the market share of townhouses now stands at 10.7% of all single-family starts, effectively unchanged from 11.1% for the prior quarter.

The peak market share of the last two decades for townhouse construction was set during the first quarter of 2008, when it reached 14.6%. This high point was set after a fairly consistent increase in share beginning in the early 1990s.

Despite the drop in market share during the Great Recession, I expect the share for townhouse construction to increase in coming years – with occasional ups and downs. For example, recent weakness in production may be associated with reduced levels of first-time homebuyers.

[…] for the first quarter of 2014 provide additional detail concerning the home construction market. Total townhouse construction declined on a year-over-year basis in the first quarter due in part to first-time buyer weaknesses. […]